•  
  •  
  •  
  •  
  •  
  • Untitled Document
    Untitled Document

    Carrizo sells Barnett Shale assets to KKR for $104M

    By Oil & Gas Financial Journal staff

    Houston-based company looks to focus on liquids-rich Eagle Ford, Niobrara

    Houston-based Carrizo Oil & Gas Inc. (NASDAQ: CRZO) has agreed to sell nearly all of its Barnett Shale Tier 1 properties to KKR Natural Resources, the partnership formed between an affiliate of Kohlberg Kravis Roberts & Co. LP (KKR) and Premier Natural Resources, for $104 million. 

    Private equity firms, like KKR, are part of seven factors driving shale, according to Don Warlick of Warlick International. In mid-2009, KKR invested $350 million into privately-held, Marcellus shale player East Resources, which sold to Royal Dutch Shell for $4.7 billion just over a year later. In June 2010, KKR announced plans to spend near $400 million in a partnership to develop Eagle Ford properties with Hilcorp Energy Co.

    In the Carrizo/KKR deal, roughly 13,000 acres will be sold, to include 75 gross (58.5 net) wells currently producing at an approximate gross rate of 15.7 MMcfe per day (8.3 MMcfed net), putting the price tag near $12,500 per flowing mcfe, according to a Jefferies & Co. Inc. report released after the announcement. An attractive price that compares favorably to Range Resources’ sale of Barnett assets for $8,000 per flowing mcfe in March, Jefferies continued.

    Estimated proved reserves associated with the divested properties amount to 122.4 bcfe, 55% of which are proved undeveloped, as determined by Carrizo's third party engineers at year-end 2010.

    Carrizo plans to pay off part of its credit facility, estimated near $155 million outstanding as of March 25, with the net proceeds. The company expects to use the resulting additional capacity under its revolving credit facility to fund, in part, its 2011 capital expenditure plan, and for general corporate purposes.

    Carrizo president and CEO S. P. "Chip" Johnson, IV commented on the sale, "Our plan to focus our Barnett Shale development drilling on our Core properties in Tarrant County and our success in the initial development of our liquids-rich Eagle Ford Shale and Niobrara resource plays made our Tier 1 Barnett property a candidate for divestiture.”

    An estimated borrowing base of $350 million, and over $400 million in 2012 cash flow following a pay-down of its North Sea Huntington development financing arrangement with BNP Paribas and Societe General, would allow the company the ability to add rigs to both liquids-rich plays. 

    Sale of the Barnett assets is expected to close in mid-May.

    Related Articles

    Marathon Oil ‘high-grading’ Eagle Ford position with non-core sale

    10/18/2012

    Houston-based Marathon Oil Corp. plans to sell certain Eagle Ford shale properties deemed no longer essential to its exploration plans.

    Hilcorp exits GOM shelf with $550M asset sale to EPL

    09/17/2012 EPL Oil & Gas Inc. has executed a purchase and sale agreement to acquire certain shallow water Gulf of Mexico shelf oil and natural gas interests from Hilcorp Energy GOM Holdings LLC for $550 m...

    Bargaining with oil giants

    02/01/2012

    Mid-market companies should know that 2012 is shaping up to be a solid year for M&A activity

    Hilcorp to buy Chevron Cook Inlet assets

    07/20/2011

    In a deal with Alaskan Chevron subsidiary Unocal, private operator Hilcorp has acquired Cook Inlet oil and gas assets for an undisclosed sum.

    More Oil & Gas Financial Articles

    Marathon Oil ‘high-grading’ Eagle Ford position with non-core sale

    Thu, Oct 18, 2012

    Houston-based Marathon Oil Corp. plans to sell certain Eagle Ford shale properties deemed no longer essential to its exploration plans.

    Hilcorp exits GOM shelf with $550M asset sale to EPL

    Mon, Sep 17, 2012

    EPL Oil & Gas Inc. has executed a purchase and sale agreement to acquire certain shallow water Gulf of Mexico shelf oil and natural gas interests from Hilcorp Energy GOM Holdings LLC for $550 million.

    Bargaining with oil giants

    Wed, Feb 1, 2012

    Mid-market companies should know that 2012 is shaping up to be a solid year for M&A activity

    Hilcorp to buy Chevron Cook Inlet assets

    Wed, Jul 20, 2011

    In a deal with Alaskan Chevron subsidiary Unocal, private operator Hilcorp has acquired Cook Inlet oil and gas assets for an undisclosed sum.

    Weekly Update: Marathon Oil Delves Further into the Eagle Ford Shale

    Fri, Jun 3, 2011

    Most Popular

    Oil & Gas Jobs

    Search More Job Listings >>
    Subscribe to OGFJ